Commercial: Companies squabble over who must satisfy strict products liability judgment

Where two companies were previously held jointly and severally liable for supplying contaminated eyewash, but one company’s culpable conduct was more extensive and of a different nature than the conduct of the other company, the first company must indemnify the second company.

Background

KeraLink International Inc., the operator of a national network of “eyebanks,” previously prevailed on its strict products liability claim against Stradis Health Care LLC and Geri-Care Pharmaceuticals Corporation, two suppliers of contaminated eyewash used to remove donated eye tissue for future transplant. Stradis and Geri-Care were held jointly and severally liable for the judgment amount of $606,415.49 plus prejudgment interest.

Stradis then claimed its liability to KeraLink was “secondary, passive, technical, or imputed,” while Geri-Care’s liability was “primary, active, and direct.” So, Stradis alleged that Geri-Care should bear full responsibility for the money judgment jointly and severally owed to KeraLink by the two tortfeasors.

The district court agreed with Stradis, granting its motion for summary judgment, and later denying Geri-Care’s motion to reconsider. But the court denied Stradis’ request to recover from Geri-Care attorney’s’ fees incurred in Stradis’ defense of KeraLink’s products liability action, and the court later denied Stradis’ motion to reconsider that ruling. Both parties appeal.

Implied indemnification

Maryland permits one joint tortfeasor to seek implied indemnity against another joint tortfeasor that is primarily culpable, provided that the party seeking indemnification is only secondarily culpable. No decisions from courts in Maryland directly address tort indemnity in the context of joint tortfeasors held liable for strict products liability. But Maryland’s intermediate appellate court has suggested that implied indemnity is available in some cases as a remedy between joint tortfeasors held strictly liable for distribution of the same defective product.

This court does not find any basis in Maryland law for excluding the availability of tort indemnification in cases of strict products liability. Cases in Maryland involving common law strict products liability, like cases alleging common law negligence, will have instances in which more than one tortfeasor will be held liable for the plaintiff’s injury and the degree of the different tortfeasors’ culpability may materially differ. In fact, as a practical matter, there likely will be more instances in the liability chain in a products case than in a simple negligence case in which the utility of, or need for, implied indemnity will be manifest.

And the principles of Maryland’s law of tort indemnity, which differentiate primary culpability from secondary or passive culpability, can be applied with equal facility to both causes of action. So, while Maryland’s courts have not directly addressed whether tort indemnity applies in a strict products liability action to indemnify a party who incorporates a defective product obtained from an upstream actual or apparent manufacturer into their own product, the court concludes that Maryland law permits such indemnification as allowed by the trial court in this case.

Here, the full factual record demonstrates that Geri-Care’s culpable conduct was more extensive and of a different nature than Stradis’ culpable conduct. Stradis remained the downstream distributor of the defective product apparently manufactured and warranted by Geri-Care, and continued to be secondarily culpable in both degree and kind to Geri-Care’s primary culpability in placing its branded eyewash in the stream of commerce.

Based on the facts presented, Stradis’ culpability was properly viewed by the trial court as being secondary to that of Geri-Care as a matter of law. The trial court’s conclusion also was consistent with the equitable nature of the remedy of implied indemnity under Maryland law, ensuring that Geri-Care was not “unjustly enriched” by Stradis’ exposure to payment of the entire judgment despite Geri-Care’s primary culpability.

Attorneys’ fees

Given the facts presented in this case and the absence of Maryland law requiring otherwise, the district court did not commit an error of law in relying on the American Rule in concluding that Stradis was not entitled to indemnification for its attorney’s fees incurred in defending against KeraLink’s suit.

Affirmed.

KeraLink International Inc. v. Stradis Health Care LLC, Case Nos. 23-1181, 23-1246, July 16, 2025. 4th Cir. (Keenan), from DMD at Baltimore (Blake). Danielle D. Giroux for Appellant/Cross-Appellee. Kelly Marie Lippincott for Appellee/Cross-Appellant. VLW 025-2-264. 20 pp.